slower because we had the gdp report as well. julie hyman joining us from the bloomberg data center. thank you very much. the fed decision is coming up in a moment. peter cook is standing by with details. very fewper continues, changes in the statement today. remains theance same but taper continues, down to $45 million a month and by buying. -- in bond buying. $20 billion for mortgage backed securities. 25 billion dollars for treasuries. they will likely continue at that measured pace if information holds up. no changes in forward guidance language. the biggest changes have to do with the economy, there is a sense that the fed sees traction in the economy. information received since the fomc committee met in march

suggests growth has picked up after slowing in the winter because of weather conditions. labor market indicators are mixed but showed employment -- showed improvement. unemployment remains elevated. household spending appears to be writing quickly -- rising quickly. recovery in housing remains slow. with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will improve gradually. isk inmmittee sees the r the economy and the labor market is nearly balance. with regard to forward guidance, no changes in the statement. viewed reaffirming its that a highly accommodative stance of monetary policy remains appropriate. the same language with regard to what could happen to interest rates over the long term. it is likely to maintain the

current target range for the federal funds rate after the asset program ends. longer-term inflation expectations remain well anchored. vote was unanimous, even kosher lakota -- even kocherlakota was on board. modest changes, tapering down to $45 billion a month. >> thank you very much. michael, ira. i have to ask you, he just mentioned that it was unanimous, are you surprised? necessarily, we have had others say my defense is not going to change anything, what there is no point. i suspect that is where kocherlakota is coming from.

what is interesting at the statement is that they do seem to see a stronger economy beginning to take shape. the slowdownt of in the first quarter on the weather, which we have not seen before. they know the adverse weather conditions. the rest of it, not a lot of change from where they were six weeks ago. theye of the things that focused on here was the fact that the more recent data from march and april has really been better. the date of january and february were worse. a weak gdp numbers today but consumption was better. inflation is still tame. the april data, confidence is higher than expectations. the current data is picking up. maybe they are hanging their hat on that. >> josh, what is your context for what you have just heard? >> i agree with all that and i think that fed is getting away with things. they have not been forced to provide any more detail on

forward guidance. they are probably enjoying that. the fact that they are able to retain as much discretion as they want. and it remains to be seen whether they will be forced later on. there is always the tension between being transparent and sharing information, but the more you are transparent less discretion you have to respond. the less flex ability you have. they are continuing to enjoy that. ira, former co-ceo mohamed el-erian wrote that one of the things to keep in mind from the fomc during this week's meeting, context. what is the fed's context? >> their approach is caution. they have to be cautious because they are worried if they go too early and they wind up taking back some of the monetary stimulus that the economy will not be able to stand on its own two feet. they are going to be cautious. that does not mean they think things are going to go badly. they both continue on this pace

and they will continue to taper, $10 billion a month. they will wait and see how the economy and the markets respond. the they will move on. >> for you as a market participant, the question is going to be because the members do not add up neatly, do they end in october or december? do they change the $10 billion amount every month. inwe think they will end october, they will just do an extra $5 billion at the october meeting. day thethe end of the market is already pricing for this. the bond market has been basically pricing for the end of qe since last summer. i think that is still the petition -- still the expectation. >> is the market still keeping an eye on inflation? long-term inflation expectations remain stable. >> inflation is the new

unemployment rate. we were looking at the 6.5%, we are basically there. our expectation from our economics team is 6.6% unemployment this month. that was the old number that used to be quoted. >> and there goes the threshold. >> when the threshold does not exist anymore at 6.5%, the new threshold is inflation moving higher i'm a core inflation in particular. they would want to see wages move higher, the general economy and the people we are supposed to support are being helped, not just corporate profits. >> let me ask in a different way, the fed has made it clear that are not going to change interest rates, it is market rates that are going to change. they affect borrowing costs. what matters to you in fixed income? what would break the 10 year out of its range? >> higher inflation and better payrolls would be two things.

i think a change in fed policy. we have been present for that dot. the fed has try to deemphasize the dots. the dots are important and we price for them. if they were going to say we are not going to go every other meeting in 2016 but every meeting, you would see 5-year note selloff quickly. >> the dots, you do not know which ones are voting members. >> voting versus nonvoting would be a nice touch. we try to handicap who each of the dots is. hawks and doves. try and weight them in influence on the fomc. you can figure out where the policy path is going to be. on friday, what kind of stronger number would you need to say? , where the market is,

would be good. especially if you had decent payrolls and maybe a tenth upt ick in hours worked. with aggregate income, that like the aggregate income. you can have a 200,000 payroll with wages going up that is good for the economy. >> julie hyman, how's the market reacting? >> we saw a little bit of a move upward and now we are right back to little change. if you look at the inner day chart of the s&p 500, we are, we up and then move we came right back down. feelingtill seeing this on the part of many investors. they want to continue to get that support from the fed. at the same time, if the fed is more optimistic on the economy, goodis theoretically a thing. all of that is still a cooling some indecision in the market. on the treasury front, they yields do not really move at all

after the statement. really seems as though the markets are treating this as status quo. >> all right, julie hyman will be back in 26 minutes past the hour with on the markets. josh, you are back in atlanta. julie mentioned, they seem to go up and down, what were investors looking for? what did they hear from the fed? >> the markets are already looking forward to the june fomc meeting. there will be a lot more information. are at thatwhere we point. we will have a couple months of not only acceleration of growth out of the winter slowdown. we will have a better slow down of what is going on in the housing market. from what i recall of what peter mc's assessmentfo

was that housing recovery remains slow. that is notable. normally ring is the selling season and you expect a bomb -- normally spring is the selling season and you expect a bump. >> michael mckee, is that what they have been talking about? the winter drag. >> that is what we do not know in the housing market. the housing market has slowed more than people thought. there were a lot of optimists going into the spring selling season. one of those things in the markets, i reckon speech us -- ira can speak to this. mye speculation that fed cutback less on mortgage bond buying because they want to simulate the housing market. we have not seen mortgage rates move at all. look at housing data, one of the things some of the surveys have suggested is not a

low supply. you had a very late spring and you have not had places on the market. in my town, the last two weeks since easter you have seen a ton of for-sale signs. there was no supply and then there is supply now. maybe part of this malaise in the housing market is just because of lack of supply. >> we will continue our discussion in a moment. ira will be staying with me, michael mckee, josh joining us from atlanta. thank you so much. we will have more of our special coverage of the fed's rate decision. politics and-- the economy in just a minute. ♪

>> watch bloomberg television all day tomorrow, betty liu goes inside pepsi. how do they get the chicken and waffle flavor?

inside the facility where pepsi put's star athletes to the test to find to gatorade. it all starts with an exclusive interview with the ceo, indra no oyi, 8:00 new york time on "in the loop." they get that flavor? let's resume our discussion. joining me now, gray, chief political strategist at potomac research. still with us, ira from credit suisse. greg, let me get your thoughts about the fed's action. allou have the best of worlds for the financial markets. a very dovish fed for another year. and you have fiscal restraint firmly in place. these things have legs and could last a year or two. should we be concerned

that the fed board of governors, that all the seats are not filled customer hopefully the nominees will get confirmed. hopefully they will get filled soon. we have not operated with a full board for many years. as long as you have good quality people who understand the economy and the regulations they have to go through, we are in good shape. it would be nice to have a few more voices. g, you mentioned fiscal restraint. you are in new york from d.c. what are you hearing? >> if you want more spending, you are not going to see much. i think this congress will not extend unemployment benefits. they will replenish funding for the highway trust fund, they have got to do that during the summer. it is a very stingy house. the house will stay republican, i don't think there's any question they will keep the house in the fall elections. restraint will continue. one quick point.

i agree the fed is short-handed, what worries me is a lack of diversity of thought. you have so many governors, with stanley fischer going to be confirmed, you only have one or two hawks left. i worry it is monolithic in terms of thinking. >> to the point where what are does itg from the fed, affect transparency or the way they go about business? leavingnk stein, who is at the end of may, was very articulate and talking about a balance sheet of $4 trillion or more has risks. it runs the risk of bubbles or market dislocations. now i think that with new confirmations, you do not have a lot of diversity of thinking. were mentioning about today's treasury refunding announcement. how does that affect the paradigm? >> the fiscal restraint just mentioned is causing budget

deficits to get much better. better than the cbo estimated, the omb estimated and even our they'll ares, pretty optimistic. the federal reserve is actually billionown debt, $80 this quarter. int is the largest paydown quite some time. they are cutting the amount of two-year notes and three year notes they are issuing. something they started last fall and they will do that for the next few months, reduce the amount of treasuries. >> action on capitol hill earlier this afternoon, the senate republicans to block the legislation to raise the minimum wage. it is currently seven dollars $.25, republicans say the measure is going to cost jobs. this is not going to pass this year. >> is really an issue for the states. a lot of states are increasing their minimum wage. for congress, no. we will not get a deal. going to affect

the voter this coming fall? is it going to be one of those where the charge is going to be you are playing class warfare? pulls wells think it for them. maybe they are grasping at straws because it does not look like a great election. i have talked to some democrats who feel that obamacare might be less of an out of trus -- less of an albatross. democrats who think that by labor day if we have an economy growing at 3.5% and unemployment and 6%, that will help. this does not feel like a good election for the democrats. >> a disappointing growth number that came out today but there was a gain in consumer purchases, they rose 3%. how do you explain that? >> one of the reasons that has occurred is that we can set our computers and buy things online. if you are snowbound, that is what you do.

you do not think about building your house. those are things like residential investment spending, much lower than some people's estimates. you can sit there and you cannot bill your dock. you can buy a next or parishes. pair ofn extra shoes. >> janet yellen said the fed has a continuing commitment to support the recovery. what is that if the economy does accelerate? ira was mentioning it is almost like you have the three legged table if the fed takes away that bowl, can thech economy stand on its own? >> she thinks there is still slack in the labor market. some studies content maybe there is not that much slack. the one thing that has impressed me as i have traveled around the country is that big areas of

this country in the sun belt are going like crazy. if you go to houston or the south bay and san francisco, silicon valley, many areas that are not as depressed as the northeast. i would worry by midyear that labor slack is going to diminish. >> coming up in a couple minutes, we talk to the mayor of san jose, california about expansion. ira, adp said today the u.s. economy added 220,000 dollars in april, up from 209000 and march. march.rom 209,000 in what do you expect friday? 15,000 is in line with the consensus, i don't see why that would change with the adp number. we are looking at aggregate income. what is going on with wages and hours worked. if those are up, the fed might be in play. >> ira and greg.

joining us here in studio, thank you both. up next, we check back with julie hyman as we focus on the fed. "bottom line" continues in just a moment. ♪

>> welcome back, this is "bottom line." streaming on your tablet, your phone, and bloomberg.com. coming up on 26 minutes past the

hour. bloomberg is on the markets. here is julie hyman. another check of the markets and how they are reacting post fed. >> or not reacting. little change in terms of where stocks are trading. i was looking at some notes that came out after the announcement. many repeated the same language, as expected, no surprises. as evidenced in what we are seeing in stock action. little change before and after the fed. if you look at what happened in the wake of the announcement some up andyou saw down action but that is a very % of arange of about .2 percent. if the treasury market, holding steady at 2.66% on the 10 year 42%.0. and gdpar moving lower

came in worse than estimates. most investors are looking forward. it seems the fed is slightly more upbeat on the economy. more on the markets and 30 minutes. more "bottom line" in two minutes. ♪

>> welcome back to the second half-hour of "bottom line." the 12 nation regional trade pact noted -- known as the transmit -- may have to proceed without japan, which continues to open its agricultural markets. aber groups and even members of president obama pots his democratic base have come out against the agreement. firm ofner in the law mcdermott, will, and emery served as a trade negotiator in the office of u.s. trade representative from 2003-2008,

and we are joined from the washed and bureau. welcome and thank you for your time today. class i am delighted to be with you. >> let's begin with the opposition here at home. much of the criticism involves concerns that the tpp could leave american workers vulnerable to competition from countries and lower labor costs. are those concerns valid? class for years, they have faced the challenge of lower labor costs. this agreement, once it is implemented, our key trading partners in america and in southeast asia, that is really of critical importance to u.s. labor and to manufacturing.

and really bringing countries into the modern trading world with modern train rules. >> i am sure you heard one of the criticisms that folks still had a little bit of apprehension . some folks are still not convinced that was the right way to go and they see that as a possible template. are there any comparisons to be drawn? >> in any trade agreement, there will be some companies, that do not end up as advantage is a situation as others. -- an whole, in agreement agreement is that it will be a huge benefit to u.s. farmers and u.s. industry and service

providers. let's not forget 95% of the world's consumers lie outside our borders. the agreement would include 11 other countries, 780 million global --and 40% of global gdp. there is always a bouncing act and u.s. the gauche raiders always try to get the best deal they possibly can. this is a huge win for all sectors for the us economy. >> in the transpacific partnership, the question is, what is in the united states for american companies and american consumers. is a really important question, one that the administration has in doing a very effective job at conveying to organized labor. let me kick off a couple of things i think are the most important aspects for what is in it for the united states. let's start with japan.

japan is the third-largest trading partner, the third largest economy in the world, and an economy and country which we have faced for decades, major barriers to u.s. agriculture, u.s. automobiles, trucks, and for the first time in literally 40 years, we have an opportunity to break down those barriers and -- for agriculture and industrial goods and for the service center, which has been close largely to u.s. service providers. if i could just that, in addition to that, there are also important added value -- take a country, i mentioned vietnam earlier. it is becoming an important trading partner. they are a key linchpin in our economic and geopolitical arrangements in southeast asia. it offers the promise of market access into vietnam for u.s.

industry and u.s. agriculture, and to bring the rules-based trade regime to many of our important trading partners in southeast asia. is one of the key components of president obama's so-called asia pivot. the deal is not finalized, what might that mean for america's influence for regent currently witnessing china's ascendance? >> i hope what you are describing does not happen. ofhink we are as a result the meeting between the prime minister and president obama, we are on the cusp of what i hope will get a conclusion in the agreement. --tom of for some reason, if, for some reason, that will mark the descendents he in the influence the united states has in asia and southeast asia, and that is not in our economic interests or the interests of our manufacturers and anger cultural producers -- >> we have a little less than a minute left.

would beijing view as a threat and alliance between the united states and the 11 countries in the asia-pacific region? -- what impact would this have on the u.s. and china? >> the easy reaction is to and itttp to be a threat includes a number of trading partners and may eventually include korea, which is a neighbor. there will be a favorable -- favorable prospect. they can live up to the high standards that are being negotiated for the agreement. they could achieve the high

level of ambition and those standards, then i think there will be an opportunity in the longer term for china to be included. they should not view it as a threat. class a partner at the law firm joining us from washington. thank you for your time and perspective. we appreciate it. >> it has been a pleasure. class coming up, a look at how websites direct you to stores. at his next. -- that is next. ♪

>> links on the side or the bottom of the page. the suggested links are not random pictures but are based on one's previous browsing history. makes aany in israel business out of curating these. it makes $100 million in an ipo here in the united states. libertas's middle east correspondent spoke with the >> the content

recommendations you find on sites like cnn and espn and fox news, the guardian and the telegraph, they were typically at the end of articles or the side of articles or videos. , whatommend to the user is the reader to do next? class how do you work that out yet so -- question -- how do you work that out? interestingwhat is in what people consume and what they find to be interesting. based on that, our algorithms, all technology-based, make recommendations. >> this is all a volumes game. how much do you take? less? or quest for half of the class -- >> for half of the >>, we do not take any. we recommend another store and espn and that creates tremendous value to the user. great content. it is great for the publisher as well. foro not charge anything

that. the link points to a story on another site, those -- those on a cost basis and are very affordable in the $.10 range. we share the revenue back with the publisher. >> half -- how far off the growth right now? quests we have been growing on key metrics over the years we have started selling about clutter years ago. >> revenues, can you give us a sense of where they are? more than $100 million. ok. some have suggested what you guys do and what your rivals now do, after emulating yourselves, is kind of blurring the line between independent journalism and content, and what is paid for publishing. two very simple principles. one is we think the user, the individual, is smart. and people understand when they are being shown ads that are made to look like something else, and our bet is that people -- people are smart. the second thing is we think the

fundamental currency of our business and the industry as a whole is not a dollar or a pound or euro. currency of our business is user trust. if we erode the trust and do not respect users and provide them with genuine and authentic content, we think this will not be sustainable over time. this is always therefore user trust and that is the guideline for every link we serve. to -- time for today's latin america report. venezuela will raise the minimum wage for workers, effective in may. the moves come after the world's fastest annual inflation rates are -- surged to 69% last month. result's federal government posted a budget surplus wider than were cast. the surplus excluding interest payments was $1.4 billion in march. the government has pledged fiscal strength to boost investor confidence and help maintain prices after perusing the deficit last year.

that is your latin america report for this wednesday. coming up, dealing with pension mayor joins me next on what you can expect. ♪

>> san jose's the third largest city in california and has benefited from the boom in silicon valley. like most local governments come it has been struggling to do with the budget deficit. that deficit stood at $115 million. the mayors of san jose, chuck reed, joins me now for more on this story. welcome and thank you for your time today. >> thanks for having me on. >> from 2001-2011, your city, san jose, it had 10 straight years of budget deficits. what economic toll has that taken on your city? >> a big impact on services we provide to

our people. our pension and health-care costs increased enormously. we had to cut services, libraries and community centers -- centers. every part of the city took a hit. class how did the city start to regroup? how did you convince companies that even in dire financial circumstances, san jose was still open for business? >> the companies are here because this is silicon valley. they want to stay here and grow here. we would assure them continue to provide basic services. in order to do that, we had to do fiscal reforms in our city. all of our people took a 10% pay cut and we have done pension reform and a lot of other fiscal reforms to make sure we could level off and get rid of the annual $100 million deficit. we are now in a recovery phase and have begun to restore

services. the economy is looking good. we are hopeful and cautiously optimistic that moving forward will be on an even keel. >> ebay, they are based in san jose. what impact have companies like that hat on your city? >> we love their jobs and tax revenues. it is our largest single taxpayer. contribution their to our economy. our people work there and pay taxes. without those companies, we would not be the capitol silicon valley. >> as you know, one of the criticisms of cities that lure big businesses to their area is the amount of giveaways, namely tax incentives. don't subsidies event cities like yours from receiving much-needed taxes, which could then be used to pay down debt or even infrastructure? >> we are not in the business of giving away -- >> we seem to have lost our feet with the mayor of san jose,

chuck reed. we were discussing what was going on in his city, namely some of the improvements based on some of the big essences that have been there, like ebay and cisco. we will try to get the mayor back, but before we do, let's check on one of the top stories we're following for today. the fed, what we have learned today from the federal reserve from the meeting, is that tapering will continue, but there were concerns about the slowdown and housing. that is the story we will continue to follow later on on streetsmart coming up at the top of the hour. gone are the days of the power lunch. ceos are thinking on their feet, literally. a growing number of executives are holding meetings on walk. president obama ended his work day with a walk on the white house grounds with his chief of staff. the roof around the south lawn takes about five minutes. ceo, sethd, the

goldman, like to take his senior staff hiking. we asked him about the benefits of walking meetings. >> having a meeting in the walk changes the dynamic. if you have a meeting with someone in the office, they're entering the room and you are entering the room with all the things that is been happening that day, all of the dynamics they bring to an office setting. you go outside and they change things up. people are not checking their e-mail or drifting off were looking at other things. they are totally focused on the conversation. all thebike path goes way to georgetown. no cars, so we do not have to worry about traffic or any other disruption. some of the more difficult conversations i have had have happened on walks. you're not a was looking directly at each other. that may be helpful when you are the person you are with has to say something difficult or emotional. some of the toughest issues we are grappling with, we may take

one last walk to talk it through. the pace of walking brings a different energy to the conversation. havelicon valley may started a trend. mark sucker berg often brings people he wants to hire on walks near the company's headquarters with whatws the deal sap in february after walking with the company's founder. watch as betty lou goes inside pepsi. how do they get the chicken and waffle flavor in their chicks? we will show you and go inside the facility where pepsi put the athletes to fine-tune gatorade formula. it starts with an exclusive interview with the ceo tomorrow at 8:00 a.m. new york time. also streaming on bloomberg.com, your phone, and your tablet. stay with us. "bottom line" returns in a moment. ♪

>> get the latest headlines at the top of the hour. that does it for this edition. i am mark ronson in new york. thank you for joining us. "on the markets" is next. i will see you tomorrow. ♪ is 56 that the hour. that means bloomberg television is on the markets. let's take a look at where stocks are trading after the f1 see decision and announcement, the only decision that was made to further taper the bond buying program. we are seeing -- seeing stocks a little higher than earlier. one third of one percent and a quarter of one third percent across the board.

we take a look at what is happening in the treasury mark did we have not seen much movement there. recently, we have seen bonds move and they continue to be in that range. the 10 year yielding 2.65%. let's get a little bit more perspective on what is going on the market in terms of reaction and lack thereof. i am joined by the bloomberg stocks editor, mike reagan. we were talking during the break. there really have not been much reactions and has not been much change in statements here. people are holding steady. >> it is almost a photocopy of last month's statement. the market had a big hissy fit after the last statement. it was more related to janet yellen's press conference afterwards on the dot plots, the forecast for when rates would increase by the various numbers. this is just a statement and nothing else. they're up a little bit since the announcement.

the big thing that surprised me and some of the investor reaction that i've heard so far, is that we have the gdp report today at basically a standstill in the economy in the first quarter and the fed says, they are very confident growth is picking up. they are sort of blowing off this. waving the weather. that is what a lot of investors have been doing. breathing a sigh of relief somewhat to that. there is so much going on this week and so much to create on that. >> it is an unusually busy week. you had a decision today. >> the fed decision. tomorrow, manufacturing, always a potentially market moving report. then you have the jobs report on friday. i was reading an interesting condimentsthey said, of those four reports in one week is very rare. only half a day times in the past 14 years. it tends to lead to much more volatility in the market about a -- an increase.

we have not seen that yet this week. so much is being thrown to them. see volatility, the little bit. >> one of the things about the fed announcement is recently, when we have seen commentary there seems to be disappointment if there is not a reemphasis of, the fed is there for you. it did not necessarily reemphasize that. that the fed is your underpinning you. that we are concerned about the economy and are here to catch you if it falls. it was more optimistic. market has recently been reacting more negatively to that. >> there is always a hand up between whether you take positive economic news at face value. decision, aering made it obvious they will just keep trimming 10 billion dollars until there's on with the stimulus. the question is when they will begin to raise rates. there is nothing about that.

>> ok. thank you so much. we appreciate it erie we will be on the markets once again a little later. "streetsmarts" is next. ♪ green.ks in the now, s&p on track for a positive april. i'm trish regan. "street smart kos quote starts now. now.art" starts ♪ >> welcome to the most important hour of the session. we have 59 minutes until the close. upong up, another taper is us. the fed cuts its bond buying program, crediting consumers for boosting economic activity. how did the central bank explained today's big gdp mess - - miss?